Trucking rates continue to change in response to market dynamics, and for the past two years, rates have soared to record after record, despite year-over-year miles driven being lower than usual. For shippers, these rates are almost unsustainable, but there is hope for those that take the time to understand what’s happening and apply a few best practices to mitigate cost increases and procure faster, reliable, and lower-cost transportation. Truckload rates have continued to climb for reasons of simple economics: demand for truckload capacity is outpacing the supply of capacity. To help mitigate or offset truckload price increases and find capacity, shippers can use the following ways to mitigate costs and keep their freight moving.
Just as paying for faster shipment turnarounds ends up more costly, shipping on certain days of the week or certain times of the year also leads to higher rates. If a load can wait to go out on an off-peak day or at some other time, it can save money on the shipping costs. Improving truckload service and prices depends, ultimately, on overall supply chain management. For instance, if the shipment details are inaccurate, rates may be higher by the time the invoice arrives. Obviously, it depends on the freight origin and destination and overall demand. Managing trucking rates by adjusting the shipping schedule has proven to be quite a practical option in times of uncertainty.
While the longest part of the shipping process, long-hauls associated with middle-mile transportation, may seem like the most critical phase that requires the most care and attention, this often is not the case. Last-mile delivery often represents the most impactful leg of any shipment, accounting for 40% or more of total transportation costs. However, reducing costs, securing profitable shipping loads, and improving customer experience here involves partnering with local shippers and carriers that can reduce the costs of the last mile and handle more local deliveries, especially in parcel shipping.
Allowing smaller parcel carriers and local transportation service providers to handle the last mile of delivery can drastically lower trucking costs and streamline the final leg of delivery, as well as lessening your burden of finding parcel carriers with capacity. Plus, this also helps to increase the number of owner-operator trucking companies in your network, which are typically lower in terms of landed costs and may actually offer a higher degree of customer service than some of the bigger national names too.
A strong partnership with carriers can also help with managing and monitoring trucking rates. When shippers create a strategic relationship with preferred carriers, they create a partnership that can help garner better rates and lower fees across the board. A longer-term contract allows both the shipper and carrier to lock in affordable rates and expected volumes. In turn, it also helps knowing capacity and freight load volume are relatively set and predictable during that contractual period. It is a win-win with long-lasting benefits for transportation procurement.
Recent market volatility showed the susceptibility of the supply chain network, and short lead times have become significant harbingers of higher trucking rates. It also demonstrated how lead time and scheduling management remain a vital component of supply chain management. As highlighted by Inbound Logistics, lead time planning ultimately comes down to the level of visibility within an organization, “Greater visibility into inbound inventories and port congestion also enables companies to assess the downstream impact delays might have on their distribution and labor planning, as well as the availability of inventory.” Recognizing these potential changes helps shippers know which markets require a longer lead time and why. Meanwhile, predictive planning and a focus on both scalability and adaptability can help shippers better plan for and manage trucking rates and fees.
Many high-demand products require the use of specialized packaging and shipping methods to ensure timely and safe delivery. Airbags, padding, strapping, extra packaging, blocking, container packing, and bracing form only a few of the necessary dunnage requirements, especially for cargo shipments and long-distance truck and rail transportation. And it can be hard to know what's really needed and where excessive preparations can end up costing more than they are worth. However, packaging often begins at the supplier, so it may be worth shippers’ time to work with suppliers to reduce dunnage and special handling requirements where available. This will have the natural benefit of making freight more attractive to carriers, which will open the doors to shipper-of-choice discounted rates and perks that will help mitigate rising costs of trucking rates too.
One of the final ways that shippers can help mitigate the costs and fight raising rates for trucking services lies in embracing technology and automation. From inventory management to better shipper-customer collaboration, innovative technology and optimizing automated processes or tools make the entire supply chain more efficient. More efficient deliveries and day-to-day processes mean less time and money wasted, which results in carrier profitability increasing, further lowering rates, and generating more significant savings from end to end.
Even as markets continue to recover and local and national economies begin to rebound, many aspects of supply chain management and operation remain challenging. Among the most difficult of them all stands the need to respond effectively and swiftly to ever-growing trucking rates. Request a newtrul demo today to see more about how your team can reduce its landed freight spend by connecting to more carriers and avoiding the hassle of traditional freight procurement.